In this article, we discuss your rights in an Illinois foreclosure and answer the following questions:
In a previous article titled “How Does an Illinois Foreclosure Work” we briefly touched on Loss Mitigation options. Loss Mitigation is a general term for options to avoid foreclosure. Loss mitigation rights are mostly covered under federal law, but generally, lenders are required to inform you of your loss mitigation options whether you ask about them or not. Lenders must contact, or make a good faith attempt to contact, you by phone no later than 36 days after a missed payment and every 36 days thereafter for each delinquent payment. Lenders must also inform you of loss mitigation options in writing no later than 45 days after the first missed payment. Working with the lender early on in the foreclosure process can help many homeowners avoid unnecessary stress and financial headaches. Some common loss mitigation options include:
The type of loss mitigation options available ultimately depend on the type of loan, what lender the loan is through, and if the loan is insured through a federal program.
Yes. Throughout the foreclosure process, the lender must send you certain notices informing you of where you are in the foreclosure process and what options may be available to you. It would be considered illegal or at least grounds for dismissal or postponing the foreclosure if you missed payments and the lender suddenly informed you that your house was going up for foreclosure auction that day. One such notice is the “breach letter,” which serves to inform you the loan is in default and that the lender has the legal option to accelerate the loan unless you cure the default and avoid foreclosure.
Another primary notice you’ll receive is the notice of pending foreclosure. Foreclosures come in two styles: judicial and non-judicial. The primary difference being judicial foreclosures must go through a court process with a judge approving the foreclosure while a nonjudicial foreclosure can proceed all the way to the auction of the foreclosed property without court involvement. For example, Illinois is a judicial foreclosure state, so the delinquent homeowner can expect to receive a complaint and summons informing them the foreclosure process has started, while in Iowa foreclosures can proceed as judicial or nonjudicial depending on how the mortgage was structured.
With nonjudicial foreclosure, the lender will usually send a notice of default to the homeowner giving the homeowner a period of time to bring the loan current. Further into the foreclosure process, the homeowner will receive a notice of sale telling them when the home is set to be sold at auction.
In certain states, such as Illinois, homeowners in foreclosure have the right to bring their loan current by paying one lump sum that covers all the missed payments, fees, and any other associated costs for the lender. The reinstatement period usually has a specific deadline, such as 6 p.m. on the last business day before the date of the auction. Most mortgages and deeds of trust also contain a clause describing the reinstatement process and timeline. You can check your mortgage documents for a heading such as “Borrower’s Right to Reinstate” to find more information.
If the mortgage contract or deed of trust does not list a right to reinstate you can still discuss the option with your lender or ask the judge in your foreclosure case to grant you the option for reinstatement. Reinstatement is typically in the best interest of all parties involved if you have the money to get current on your loan and pay any other fees accrued during the foreclosure process.
Whether in a judicial or nonjudicial foreclosure state, as a homeowner you have many other rights in the foreclosure process, including:
If you have any questions about foreclosures and your rights don’t hesitate to give us a call at 630-324-666.
O'Flaherty Law is happy to meet with you by phone or at our office locations in: